Abnormal loss and abnormal gain account

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Reference no: EM132464180

Problem - The manufacture of product kei involves three production processes namely, welding, filling and spraying. In the month of November, 2000 units valued at sh.50 each entered production and the cost incurred for the three processes are given below:

 

Process Cost

Total

 

 

Welding

Filling

Spraying

Direct material

40,000

60,000

69,240

169,240

Direct labour

60,000

80,000

100,000

240,000

Direct expenses

10,000

4,520

-

14,520

Manufacturing overheads

-

-

-

120,000

 

The output from each process was as follows:

Welding 1,840 units

Filling 1,740 units

Spraying 1,600 units

The estimated normal loss for each process was:

Welding 10%

Filling 5%

Spraying 10%

The loss in each process represented defective units which could be disposed off at the following values: Welding sh.30 per unit; Filling sh.50 per unit; Spraying sh.60 per unit.

There were no stocks of materials or work in progress at the beginning or end of the month. The output of each process poses directly to the next process at cost without any provision for internal profit. Manufacturing overheads are absorbed by each process at 50% of the direct labour cost.

Required -

i) Process account for each of the three processes.

ii) Abnormal loss and abnormal gain account. Show all workings.

Reference no: EM132464180

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